Macroeconomic confidence index managed by CFA declines in Romania during April, amidst the approach of presidential elections.
Romania's economic confidence plummeted in April, falling 10.6 points to 33.3 points, below the 50-point neutral benchmark, as per the Macroeconomic Confidence Indicator compiled by the CFA Romania Society. This is the lowest level since the onset of the Covid-19 pandemic.
The decline was solely attributed to the expectations component of the indicator, which dropped 16.9 points to 25.9 points, while the current conditions component rose 2.1 points to 48.2 points. The survey also revealed that 64% of participants believe Romania's sovereign rating will remain in the investment-grade sector over the next 12 months, a decrease from 82% in March. Concurrently, 36% anticipate a downgrade to the non-investment grade.
Adrian Codirlaşu, president of the CFA Romania Association, attributes the drop in the expectations component to the increased risk of a presidential election result that might lead Romania toward Euroscepticism, causing the confidence indicator to hit its lowest value since the pandemic. Meanwhile, the anticipated budget deficit for the current year was increased to 8% of GDP, and the projected economic growth fell below 1%.
Looking ahead to 2025, the state budget deficit forecast increased compared to the previous month, from an average expectation of 7.4% of GDP in March to 7.9% of GDP in April. Economic growth expectations for 2025 decreased again, at an average value of 0.7%, with participants expressing concerns about a possible recession. Public debt, calculated as a percentage of GDP, is expected to increase to 57% in the next 12 months.
Analysts estimate an inflation rate for the 12-month horizon (April 2026) increasing to 4.78%. Approximately 86% of CFA survey participants anticipate a depreciation of the leu in the next 12 months, with the average value of the expectations for the 6-month horizon at RON 5.0494 per euro and RON 5.1112 per euro for the 12-month horizon.
According to the Enrichment Data, Romania’s economy is projected to experience modest growth in 2025, with persistent fiscal and current account deficits. Public debt is expected to rise, inflation is moderating but remains elevated, and unemployment is stable. Economic risks stem from global uncertainty, domestic political and fiscal volatility, and external trade headwinds.
(iulian@our website*)(Photo source: Lovelyday12/Dreamstime.com)
Finance and politics intertwined as Adrian Codirlaşu, president of the CFA Romania Association, links the decline in expectations regarding Romania's economic confidence to the potential outcomes of the upcoming presidential election, indicating a surge in Euroscepticism could destabilize the economy. Meanwhile, the general news highlights an increase in public debt, potential recession, and inflation rate predictions for 2025, all contributing to concerns about Romania's business sector and overall economy.
